This Week in Compliance: Petrobras pays over USD 853 million to settle FCPA charges

by GAN Integrity on September 28th, 2018

This Week in Compliance: Petrobras pays over USD 853 million to settle FCPA charges

Here’s what’s been going on in the compliance world this week:

Business

Petrobras pays over USD 853 million to settle FCPA charges: Brazilian state-run oil company Petrobras agreed on Thursday to settle charges that it facilitated the payment of hundreds of millions of dollars in bribes to various Brazilian politicians and political parties. The settlement covers FCPA charges brought by the U.S. DOJ and SEC as well as Brazilian prosecutors. The SEC and DOJ will each receive a 10 percent share of the USD 853.2 million penalty, with the remaining 80 percent earmarked for Brazilian authorities. In addition, Petrobras agreed to pay over USD 933 million in disgorgement, but this amount is to be reduced by any payments the firm makes into a class action settlement fund relating to litigation earlier this year that resulted in a USD 2.95 billion settlement. Petrobras further committed to improving its compliance program and cooperating with ongoing investigations related to the allegations. Petrobras has been at the center of a wide-reaching corruption investigation in Brazil know as Operation Car Wash.

Uber fined USD 148 million over data breach: Uber, the San Francisco-based ride-hailing company, reached an agreement with all 50 U.S. states and the District of Columbia to pay USD 148 million for failing to notify authorities of a massive data security breach that leaked drivers’ personal information. Uber neglected to report the breach for over a year, leading Illinois Attorney General Lisa Madigan to call the case “egregious” and the delay “inexcusable”. The personal data included driver’s license information of roughly 600,000 drivers in the U.S. In addition to the fine, the settlement requires Uber to comply with consumer protection laws and create stronger data protection mechanisms. The payout is to be divided among the states based on the number of active drivers each has. Illinois plans to disburse 100 dollars to each affected driver in the state.

SEC awards whistleblower overseas USD 4 million: The SEC announced on Monday that it had awarded a whistleblower located overseas who provided “extensive assistance” USD 4 million for cooperating with the agency. The outcome of the investigation was said to be a direct result of the tip from the whistleblower. The nationality of the whistleblower was not made public. This is not the first award made to a foreign whistleblower; the SEC awarded USD 4.1 million to another whistleblower last year and over USD 30 million in 2014 to another. Awards range from 10 percent to 30 percent of the money collected from penalties exceeding USD 1 million.

Former CEO of Chilean mining company settles FCPA charges: Patricio Contesse González, the former CEO of Sociedad Química y Minera de Chile, S.A (SQM) agreed this week to pay USD 125,000 to settle civil charges that he violated the Foreign Corruption Practices Act. The SEC said that González caused SQM to “make nearly USD 15 million in improper paymentsto Chilean political figures and others connected to them”. Among those who were paid bribes was the son of a Chilean party official; he received bribes for five years, even after SQM’s head of internal audit asked González to cease the payments. The charges relate to the USD 30 million settlement SQM struck with the DOJ and SEC last year. González agreed to the settlement without admitting nor denying the findings in the SEC’s order.

Germany’s financial watchdog orders Deutsche Bank to improve money-laundering controls: Germany’s financial watchdog, known as BaFin, appointed a third party to assess progress at Deutsche Bank in its money-laundering prevention efforts. The appointment represents the first time BaFin has installed an external monitor relating to money laundering. The appointment comes at a time when European regulators are increasing scrutiny of banks’ dealing with their customers; Danske Bank is embroiled in a scandal over its Estonian branch which may have helped to launder billions of dollars of funds. Deutsche Bank itself was fined nearly USD 700 million last year for money-laundering failures. The bank has said it agreed with BaFin it needs to improve its processes.

Government

President of the Maldives voted out of office after corruption revelations:Abdulla Yameen, the current autocratic leader of the island nation was defeated last Sunday in a landslide election that saw opposition lawmaker Ibrahim Mohamed Solih rise to power. Yameen became embroiled in a corruption scandal after an investigation last week alleged that Ahmed Adeeb, the country’s former tourism minister, handed out at least fifty islands to tourism developers without a bidding process. It is estimated that at least USD 79 million was embezzled in the no-bid deals.

Saudi Arabia amends anti-corruption law to remove statute of limitations:Saudi Arabia amended its anti-corruption law this Tuesday to remove the 60-day statute of limitations for investigating allegations against current and former ministers. The move is seen as an extension of the ‘purge’ that started last November when dozens of princes, businessmen, and other high-ranking officials were detained on Crown Prince Mohammed bin Salman’s orders. The majority of detainees were released following exonerations or financial settlements, totaling in excess of USD 100 billion.

Noteworthy

UK Serious Fraud Office general counsel leaves for private practice: Alun Milford, General Counsel for the UK’s Serious Fraud Office will leave the white-collar crime fighting agency in early 2019 to become a partner at Kingsley Napley LLP. Milford is departing after serving six years as the agency’s top counsellor, following the installment of new SFO Director Lisa Osofsky earlier in September. Experience in public prosecution agencies is in high demand among law firms with corporate financial crime practices, as evidenced by the hiring of former SFO Director David Green by Slaughter & May LLP, who will start in October. The news follows the appointment of former SFO senior prosecutor and case controller John Gibson as partner at Cohen & Gressler LLP last week.

Building a comprehensive structure for your compliance program is essential to effectively and efficiently mitigate risk. And while risks vary from one company to another based on industry, location, and partners – thereby disqualifying any one-size-fits-all compliance program – the underlying structure of a program can, to a reasonable extent, be broken down into a set of components.